Finance

Crude oil eases for second day on rising USA production

Crude oil eases for second day on rising USA production

US production estimates in a weekly Energy Information Administration (EIA) report suggested domestic output continued to climb, potentially undermining an OPEC-led supply cut.

On Tuesday, the American Petroleum Institute, an industry group, forecast a 1.3 million-barrel fall in US crude supplies, a 3.7-million-barrel decrease in gasoline stocks and a 1.6-million-barrel fall in distillate inventories, for the week ended April 7.

According to OPEC, crude oil supply from non-members this year will average 57.89 million bpd, thanks to growing output in the us and modest declines in Columbia and China.

Brent crude, the global oil benchmark, fell 0.27% to $55.83 a barrel on London's ICE Futures exchange.

The Organisation of the Petroleum Exporting Countries agreed to cut output by about 1.2 million barrels per day for six months from January 1 to prop up prices and reduce a glut.

USA crude futures reversed earlier losses, closing up 0.6% to $53.40 a barrel.

Louisiana to receive $8.1M to help combat opioid addiction
The funds will come from the 21st Century Cures Act which passed Congress past year and was signed by President Obama. The grant will fund expanded access to treatment, education and prevention.

Oil prices pared gains on Wednesday after the report was released to trade at around $56 a barrel.

According to the renewed forecast, in 2017, the demand for oil will be 96.32 mln barrels per day against 96.31 mln barrels per day under the March estimate. Russian Federation and 10 other non-OPEC producers agreed to cut half as much.

OPEC upgraded its 2017 global demand growth forecast to 1.27 million barrels per day, an upwards revision of 10,000 barrels per day as thirst from Asia rises. The International Energy Agency said that the oil market is very close to balancing.

Oil prices of $60/bbl over the next three years and $70-$80 next decade will be roughly enough to balance the market, Ibrahim al-Muhanna, a former senior adviser to Saudi oil minister and now an independent consultant, says in prepared speech remarks.

"Even though gasoline prices this summer are expected to be 10% higher than previous year, USA highway travel and gasoline demand are expected to increase", according to the Energy Information Administration's short-term outlook report. OPEC members have previously said they lean toward oil cut extensions, as long as non-members are also involved. In its monthly market report for April, secondary sources told OPEC economists that member-state production declined in March by 152,000 barrels per day to 31.9 million barrels per day.

The EIA was scheduled to publish official U.S. production and inventory data on Wednesday.


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